According to the U.S. Securities and Exchange Commission, Mr. Falcone illegally colluded with large investors to make it easier for them to take money out of the hedge fund, but harder for small investors to do so. By cutting these deals and gaining the shareholder votes he need to institute this plan, the SEC alleges that Mr. Falcone enabled himself to commit yet another crime -- illegally scooping $113.2M USD from the hedge fund to pay his personal taxes.

Philip Falcone, one a venture capital wizard, has lost over half his fortune. Now he stands accused of stealing his investors' money to pay his taxes and manipulating bonds.
[Image Source: Jacob Kepler/Bloomberg/Getty Images]

He also stands accused of a third offense -- bond manipulation. The accusation is that Mr. Falcone artificially inflated high-yield bond prices in order to make it impossible for short-sellers to making a profit, despite bond prices falling.

As with many financial figures charged by the SEC, the cause of Mr. Falcone's fall from grace likely lies less from his decision disenfranchising small investors (although they did), but more due to the fact that some of his tactics -- like artificially dealing losses to short sellers -- began to hurt large institutional investors as well. Once that happened, Mr. Falcone found he neither had friends in high nor low places.

Matthew Dontzin, lawyer to the billionaire, toldThe Wall Street Journal that claims the SEC's charges are "without merit and will all be vigorously defended in the courthouse."

Mr. Falcone was recently estimated to be worth $1.1B USD, having lost approximately half of his $2.2B USD fortune on the LightSquared bid. Mr. Falcone is 49 and resides in New York City. He is an investor in the Minnesota Wild National Hockey Leage (NHL) team, according to Forbes.